My Turn: Actually, there are better options than raising the minimum wage

A recent Concord Monitor editorial appealed to the paper’s readers to consider the facts in the debate over a higher minimum wage (“On minimum wage, hold lawmakers accountable,” Feb.12). As New Hampshire considers a proposal to raise the state wage floor to $9 an hour over the next two years, it’s a good piece of advice. Unfortunately, the Monitor failed to live up to its own standard in the editorial.

Start with the Monitor’s characterization of my organization, the Employment Policies Institute, as a business-backed “fog machine” that’s not actually involved in research.

That would come as a surprise to the dozens of independent economists from top-notch universities whose work on wage and labor issues is featured on our website – research that’s often published in peer-reviewed academic journals.

It’s true that EPI receives some support from the business community – a widely-known fact you can even get from my tagline at the end of this column. But that’s not the Monitor’s real problem with my organization – after all, the editorial board has previously cited the labor union-backed Economic Policy Institute without offering any disclosure about that organization’s funding. Instead, the Monitor attacks EPI institutionally because it can’t refute the facts on the minimum wage.

A different conclusion

Consider the Monitor’s vague claim that “decades” of studies show that a higher minimum wage doesn’t reduce employment. You can take the editorial board’s word for it – or you can take the word of two economists at the University of California-Irvine and the Federal Reserve Board who have actually read all of those studies and came to a very different conclusion. Specifically, they found that 85 percent of the best studies point to lost jobs and opportunities after the minimum wage increases.

That doesn’t mean there aren’t outliers – and the Monitor is welcome to cite them. But to claim that the research consensus on raising the minimum wage points toward no effect on jobs isn’t just misleading – it’s flat out wrong.

We can all agree that boosting the incomes of less-skilled and less-experienced employees is a desirable goal. But simply asserting that a higher minimum wage will reduce poverty doesn’t make it so. There were 28 states that raised their minimum wages between 2003 and 2007 with the same well-intentioned goal. But economists from American and Cornell Universities who studied that time period found no associated reduction in poverty.

Other than the obvious explanation – it’s hard to be pulled out of poverty if you lose your job – the researchers also found that a wage increase is poorly targeted to the poor.

Nearly 60 percent of individuals in poverty don’t have a job and thus aren’t affected by an increase in the minimum wage. Of those who do earn the minimum, most are not the primary breadwinner and don’t live in poor families. In New Hampshire specifically, Census Bureau data show that the average family income of an employee covered by a $9 minimum wage is above $79,000 per year.

A better path

If the Monitor wishes to throw its voice behind a real poverty-reduction strategy, it might consider endorsing a state supplement to the federal Earned Income Tax Credit. Twenty-five states plus the District of Columbia have done the same, and the results are impressive: One study from researchers at the University of Georgia and San Diego State University found a 1 percent drop in poverty for each 1 percent increase in a state’s EITC.

Results rather than rhetoric: It’s a better strategy for New Hampshire and for the country.

(Michael Saltsman is research director at the Employment Policies Institute, which receives support from businesses, foundations, and individuals.)